Coursera Capstone

IBM Applied Data Science Capstone

Opening a New Shopping Mall in Kuala Lumpur, Malaysia

By: Chia Hooi Lim

January 2019

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Introduction
For many shoppers, visiting shopping malls is a great way to relax and enjoy themselves during
weekends and holidays. They can do grocery shopping, dine at restaurants, shop at the various
fashion outlets, watch movies and perform many more activities. Shopping malls are like a one-stop
destination for all types of shoppers. For retailers, the central location and the large crowd at the
shopping malls provides a great distribution channel to market their products and services. Property
developers are also taking advantage of this trend to build more shopping malls to cater to the
demand. As a result, there are many shopping malls in the city of Kuala Lumpur and many more are
being built. Opening shopping malls allows property developers to earn consistent rental income. Of
course, as with any business decision, opening a new shopping mall requires serious consideration
and is a lot more complicated than it seems. Particularly, the location of the shopping mall is one of
the most important decisions that will determine whether the mall will be a success or a failure.

Business Problem

The objective of this capstone project is to analyse and select the best locations in the city of Kuala
Lumpur, Malaysia to open a new shopping mall. Using data science methodology and machine
learning techniques like clustering, this project aims to provide solutions to answer the business
question: In the city of Kuala Lumpur, Malaysia, if a property developer is looking to open a new
shopping mall, where would you recommend that they open it?

Target Audience of this project

This project is particularly useful to property developers and investors looking to open or invest in
new shopping malls in the capital city of Malaysia i.e. Kuala Lumpur. This project is timely as the city
is currently suffering from oversupply of shopping malls. Data from the National Property
Information Centre (NAPIC) released last year showed that an additional 15 per cent will be added to
existing mall space, and the agency predicted that total occupancy may dip below 86 per cent. The
local newspaper The Malay Mail also reported in March last year that the true occupancy rates in
malls may be as low as 40 per cent in some areas, quoting a Financial Times (FT) article cataloguing
the country's continued obsession with building more shopping space despite chronic oversupply.

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Data
To solve the problem, we will need the following data:

• List of neighbourhoods in Kuala Lumpur. This defines the scope of this project which is
confined to the city of Kuala Lumpur, the capital city of the country of Malaysia in South East
Asia.
• Latitude and longitude coordinates of those neighbourhoods. This is required in order to
plot the map and also to get the venue data.
• Venue data, particularly data related to shopping malls. We will use this data to perform
clustering on the neighbourhoods.

Sources of data and methods to extract them

This Wikipedia page (https://en.wikipedia.org/wiki/Category:Suburbs_in_Kuala_Lumpur) contains a

list of neighbourhoods in Kuala Lumpur, with a total of 70 neighbourhoods. We will use web scraping
techniques to extract the data from the Wikipedia page, with the help of Python requests and
beautifulsoup packages. Then we will get the geographical coordinates of the neighbourhoods using
Python Geocoder package which will give us the latitude and longitude coordinates of the
neighbourhoods.

After that, we will use Foursquare API to get the venue data for those neighbourhoods. Foursquare
has one of the largest database of 105+ million places and is used by over 125,000 developers.
Foursquare API will provide many categories of the venue data, we are particularly interested in the
Shopping Mall category in order to help us to solve the business problem put forward. This is a
project that will make use of many data science skills, from web scraping (Wikipedia), working with
API (Foursquare), data cleaning, data wrangling, to machine learning (K-means clustering) and map
visualization (Folium). In the next section, we will present the Methodology section where we will
discuss the steps taken in this project, the data analysis that we did and the machine learning
technique that was used.

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Methodology
Firstly, we need to get the list of neighbourhoods in the city of Kuala Lumpur. Fortunately, the list is
available in the Wikipedia page (https://en.wikipedia.org/wiki/Category:Suburbs_in_Kuala_Lumpur).
We will do web scraping using Python requests and beautifulsoup packages to extract the list of
neighbourhoods data. However, this is just a list of names. We need to get the geographical
coordinates in the form of latitude and longitude in order to be able to use Foursquare API. To do so,
we will use the wonderful Geocoder package that will allow us to convert address into geographical
coordinates in the form of latitude and longitude. After gathering the data, we will populate the data
into a pandas DataFrame and then visualize the neighbourhoods in a map using Folium package. This
allows us to perform a sanity check to make sure that the geographical coordinates data returned by
Geocoder are correctly plotted in the city of Kuala Lumpur.

Next, we will use Foursquare API to get the top 100 venues that are within a radius of 2000 meters.
We need to register a Foursquare Developer Account in order to obtain the Foursquare ID and
Foursquare secret key. We then make API calls to Foursquare passing in the geographical
coordinates of the neighbourhoods in a Python loop. Foursquare will return the venue data in JSON
format and we will extract the venue name, venue category, venue latitude and longitude. With the
data, we can check how many venues were returned for each neighbourhood and examine how
many unique categories can be curated from all the returned venues. Then, we will analyse each
neighbourhood by grouping the rows by neighbourhood and taking the mean of the frequency of
occurrence of each venue category. By doing so, we are also preparing the data for use in clustering.
Since we are analysing the “Shopping Mall” data, we will filter the “Shopping Mall” as venue
category for the neighbourhoods.

Lastly, we will perform clustering on the data by using k-means clustering. K-means clustering
algorithm identifies k number of centroids, and then allocates every data point to the nearest
cluster, while keeping the centroids as small as possible. It is one of the simplest and popular
unsupervised machine learning algorithms and is particularly suited to solve the problem for this
project. We will cluster the neighbourhoods into 3 clusters based on their frequency of occurrence
for “Shopping Mall”. The results will allow us to identify which neighbourhoods have higher
concentration of shopping malls while which neighbourhoods have fewer number of shopping malls.
Based on the occurrence of shopping malls in different neighbourhoods, it will help us to answer the
question as to which neighbourhoods are most suitable to open new shopping malls.

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Results
The results from the k-means clustering show that we can categorize the neighbourhoods into 3
clusters based on the frequency of occurrence for “Shopping Mall”:

• Cluster 0: Neighbourhoods with moderate number of shopping malls

• Cluster 1: Neighbourhoods with low number to no existence of shopping malls
• Cluster 2: Neighbourhoods with high concentration of shopping malls

The results of the clustering are visualized in the map below with cluster 0 in red colour, cluster 1 in
purple colour, and cluster 2 in mint green colour.

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Discussion
As observations noted from the map in the Results section, most of the shopping malls are
concentrated in the central area of Kuala Lumpur city, with the highest number in cluster 2 and
moderate number in cluster 0. On the other hand, cluster 1 has very low number to no shopping
mall in the neighbourhoods. This represents a great opportunity and high potential areas to open
new shopping malls as there is very little to no competition from existing malls. Meanwhile,
shopping malls in cluster 2 are likely suffering from intense competition due to oversupply and high
concentration of shopping malls. From another perspective, the results also show that the
oversupply of shopping malls mostly happened in the central area of the city, with the suburb area
still have very few shopping malls. Therefore, this project recommends property developers to
capitalize on these findings to open new shopping malls in neighbourhoods in cluster 1 with little to
no competition. Property developers with unique selling propositions to stand out from the
competition can also open new shopping malls in neighbourhoods in cluster 0 with moderate
competition. Lastly, property developers are advised to avoid neighbourhoods in cluster 2 which
already have high concentration of shopping malls and suffering from intense competition.

Limitations and Suggestions for Future Research

In this project, we only consider one factor i.e. frequency of occurrence of shopping malls, there are
other factors such as population and income of residents that could influence the location decision
of a new shopping mall. However, to the best knowledge of this researcher such data are not
available to the neighbourhood level required by this project. Future research could devise a
methodology to estimate such data to be used in the clustering algorithm to determine the
preferred locations to open a new shopping mall. In addition, this project made use of the free
Sandbox Tier Account of Foursquare API that came with limitations as to the number of API calls and
results returned. Future research could make use of paid account to bypass these limitations and
obtain more results.

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Conclusion
In this project, we have gone through the process of identifying the business problem, specifying the
data required, extracting and preparing the data, performing machine learning by clustering the data
into 3 clusters based on their similarities, and lastly providing recommendations to the relevant
stakeholders i.e. property developers and investors regarding the best locations to open a new
shopping mall. To answer the business question that was raised in the introduction section, the
answer proposed by this project is: The neighbourhoods in cluster 1 are the most preferred locations
to open a new shopping mall. The findings of this project will help the relevant stakeholders to
capitalize on the opportunities on high potential locations while avoiding overcrowded areas in their
decisions to open a new shopping mall.

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References
Category:Suburbs in Kuala Lumpur. Wikipedia. Retrieved from
https://en.wikipedia.org/wiki/Category:Suburbs_in_Kuala_Lumpur

Foursquare Developers Documentation. Foursquare. Retrieved from

https://developer.foursquare.com/docs

Malay Mail. (2018, March 14). Malls facing meltdown as glut continues. Malay Mail. Retrieved from
https://www.malaymail.com/s/1597735/malls-facing-meltdown-as-glut-continues

Tan, H. H. (2018, April 5). An oversupply of retail space in Malaysia. StarProperty.my. Retrieved from
http://www.starproperty.my/index.php/articles/property-news/an-oversupply-of-retail-space-in-
malaysia/

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Appendix
Cluster 0
• Bangsar South • Damansara Town • Jalan Duta • Setiawangsa
• Bukit Bintang Centre • Kampung Baru, • Shamelin
• Bukit Nanas • Damansara, Kuala Kuala Lumpur • Taman Desa
• Bukit Tunku Lumpur • Medan Tuanku • Taman Tun Dr
• Chow Kit • Dang Wangi • Mont Kiara Ismail
• Damansara Heights • Jalan Cochrane, • Segambut
Kuala Lumpur

Cluster 1
• Alam Damai • Desa Petaling • Salak South • Taman Len Seng
• Ampang, Kuala • Federal Hill, Kuala • Semarak • Taman Melati
Lumpur Lumpur • Sentul Raya • Taman Midah
• Bandar Menjalara • Happy Garden • Setapak • Taman OUG
• Bandar Sri Permaisuri • Jinjang • Sri Hartamas • Taman P. Ramlee
• Bandar Tasik Selatan • Kampung Datuk • Sri Petaling • Taman Sri Sinar
• Bandar Tun Razak Keramat • Sungai Besi • Taman Taynton
• Batu 11 Cheras • Kepong • Taman Bukit Maluri View
• Batu, Kuala Lumpur • Kuchai Lama • Taman Cheras • Taman Wahyu
• Bukit Jalil • Maluri Hartamas • Titiwangsa
• Bukit Kiara • Miharja • Taman Connaught • Wangsa Maju
• Bukit Petaling • Pantai Dalam • Taman Ibukota
• Cheras, Kuala Lumpur • Putrajaya

Cluster 2
• Bangsar • Brickfields • Lembah Pantai • Taman U-Thant
• Bangsar Park • KL Eco City • Pudu, Kuala Lumpur